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Union Budget 2018: Defence gets 1.58% of GDP, lowest allocation since 1962

Welcoming the defence budget, Defence Minister Nirmala Sitharaman said it was a “very reasoned and realistic accommodation of our expectations”.

Written by Sushant Singh | New Delhi | Updated: February 2, 2018 10:22 am
Defence allocation in union budget 2018 Union Railway Minister Nirmala Sitharaman (Express file photo)

While the government has increased the defence budget by 5.91 per cent for FY 2018-19 to Rs 2,95,511.41 crore, the allocation is estimated at around 1.58 per cent of the country’s GDP — the lowest since 1962. An additional amount of Rs 1,08,853.30 crore has been provided for defence pensions.

The defence budget, which will account for 12.10 per cent of the total central government expenditure, is 7.81 per cent more than the Rs 2,74,114.12 crore announced in the last budget for FY 2017-18 — the figure was later revised to Rs 2,79,003.85 crore.

“A lot of emphasis has been given to modernising and enhancing the operational capability of the defence forces. A number of initiatives have been taken to develop and nurture intrinsic defence production capability to make the nation self-reliant for meeting our defence needs. Ensuring adequate budgetary support will be our priority,” Finance Minister Arun Jaitley said in his Budget speech.

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Defence allocation in union budget 2018 Finance Minister Arun Jaitley arrives in Parliament on Thursday to present the Union Budget. Express photo by Renuka Puri.

Of the Rs 2,95,511.41 crore allocated, Rs 1,95,947.55 crore has been allocated for revenue (net) expenditure and Rs 99,563.86 crore for capital expenditure for the defence services and various organisations and departments under the defence ministry. The amount allocated for capital expenditure, including all modernisation related expenditure, is 33.1 per cent of the total central government expenditure on capital account.

But the allocation for defence pensions, at Rs 1,08,853.30 crore, has shot up by 26.60 per cent above the BE 2017-18 of Rs 85,740 crore and by 14.26 per cent over RE 2017-18 of Rs 95,000 crore.

This means that the country will spend more on defence pensions than it will on capital expenditure. Moreover, this is also the first time the pension amount has breached the Rs 1 lakh crore mark.

Welcoming the defence budget, Defence Minister Nirmala Sitharaman said it was a “very reasoned and realistic accommodation of our expectations”. Stating that the “allocation of funds for the defence ministry reflects what can be absorbed in a year”, Sitharaman said “defence modernisation is an ongoing process we will prioritise between competing demands”.

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In his Budget speech, Jaitley also announced “measures to develop two defence industrial production corridors in the country”. “The government will also bring out an industry friendly Defence Production Policy 2018 to promote domestic production by public sector, private sector and MSMEs,” he said.

“These are the first ever defence production corridors being formed in the country. These defence industry corridors will give a big boost to defence production in the country,” said Sitharaman.

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  1. F
    Facts can't be digested
    Feb 13, 2018 at 7:25 pm
    .....
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    1. F
      Facts can't be digested
      Feb 13, 2018 at 7:02 pm
      This low allocation can only be sufficient if all RSS Goons are sent across borders to fight China and Pakistan.
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      1. F
        Facts can't be digested
        Feb 13, 2018 at 6:59 pm
        When Pakistan allocating very high share to its defense in its budget, what is wrong with Modi Govt?, how can we Combat terrorism and Pakistan with such an allocation?, Modi proved to be such an incompetent PM that India has ever produced. Modi is reducing India's image as "Barking Dog seldom bites" Internationally.
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        1. D
          Don
          Feb 2, 2018 at 11:52 am
          It is a useless budget. No middle class or industrialist is happy with it. Sensex has crashed. Farmers are too confused to react. The Indian citizen will speak up loudly when the vote in the next general elections.
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